Trump tariffs won’t easily derail euro zone recovery

My latest opinion piece for Reuters is out. It summarises my views on why the reciprocal tariffs of the US against the EU are likely a nothingburger.

Of course, there is the threat from the US to add VAT to the mix which is patently absurd because VAT is levied at the equal rate to US imports and domestically produced goods. So it does not give EU goods an advantage. What people in the US administration don’t understand is that VAT is a sales tax, just calculated differently. But I guess someone in Brussels will educate the folks in Washington on that. Besides, only using reciprocal tariffs on actual tariffs allow Trump to claim a win without creating massive inflation in the US.

In any case, here is the piece:

Trump tariffs won’t easily derail euro zone recovery: Klement

The euro zone is showing early signs of an economic recovery that is unlikely to be derailed by the tariffs the Trump administration has threatened thus far. But that doesn’t mean European policymakers can let their guard down.

Many investors and economists believe the euro zone will continue to be stuck with low growth in 2025. The consensus among economists is for the bloc’s real GDP growth to hover around +1.0% in 2025, only a little higher than the +0.7% achieved in 2024 and well below the U.S.’s expected +2.0% pace…

Read the full article here: https://www.reuters.com/markets/europe/trump-tariffs-wont-easily-derail-euro-zone-recovery-says-klement-2025-02-17/